This paper presents an agent-based analysis of the impact of different cross-border balancing arrangements on balancing market performance for the case of Northern Europe, i.e. the Netherlands, Germany and the Nordic region, taking into account the change in behaviour of Balance Responsible Parties (BRPs). The four compared arrangements are separate markets, Area Control Error (ACE) netting, balancing energy trading, and a common merit order list. It is found that ACE netting reduces the total Dutch imbalance costs by 25%, but that the more advanced arrangements have the potential to reduce those costs for the Netherlands and Germany by as much as 50%. However, in case of the common merit order list the imbalance risks for Nordic BRPs increase largely because of the regional marginal pricing, and the system balance states of Germany and the Nordic region are largely affected due to changes in BRP behaviour. The large imbalance costs reductions in Germany and the Netherlands are the result of the import of more than half of the balancing energy from the Nordic region, which is possible because of the high availability of cross-border capacity between the areas.@en

The topic of electricity balancing market integration is first and foremost concerned with the distinction between different cross-border balancing arrangements. Four main arrangements are ACE netting, BSP-TSO trading, an additional voluntary pool, and a common merit order list. In order to investigate the impact of different cross-border balancing arrangements, an agent-based model has been built, which simulates the operation of the balancing markets of the Netherlands, Germany and the Nordic region, including the surplus and balancing energy exchange resulting from integration. The results show that different arrangements have a different impact on imbalance costs for the market. For the case of Northern Europe, the common merit order list results in the lowest imbalance costs, but ACE netting and the voluntary pool are also beneficial integration steps.@en